Banks give more generous perks for new deposits

— -- Banks, large and small, are rolling out ever more generous perks — airline tickets, cash and even donations to charity — to drum up business at a time when their balance sheets are groaning under the weight of bad loans.

JPMorgan Chase jpm is offering up to $250 to business customers who bring money over from other banks, its most generous offer ever. SunTrust, sti in an offer that ended last month, offered a $100 donation to charity when consumers opened up a new checking account and accepted and used a Visa debit card by Feb. 15.

Meanwhile, community banks such as Columbia Bank, of Columbia, Md., are giving away perks such as free companion airline tickets to new depositors.

Banks are also attracting deposits by keeping rates on certificates of deposit at healthy levels, despite the Fed's interest rate cuts, says John Scaldara, chief executive of Columbia Bank.

Call Federal Credit Union, in Richmond, Va., attracted $15 million in funds in two weeks when it offered a 9-month CD yielding 5% earlier this year. And U.S. Bank recently boosted the rate on its small-business money market accounts, offering consumers a rate of up to 2% on their savings.

Deposits have always been a competitive business for banks. But at a time when bank capital has been whittled away by loan losses, and banks are searching for low-cost funding, deposits have become more important, says Greg McBride, a senior analyst at

More players have also gotten into the retail banking business. Capital One, once known mainly for its credit cards, expanded its retail banking business in recent years with its acquisition of Hibernia National Bank and North Fork Bancorp.

Meanwhile, investment banks Morgan Stanley ms and Goldman Sachs gs entered the deposit-taking fray when they converted to bank-holding companies in September.

Banks' aggressive promotions to attract deposits are a sign of the times, says Diana Sheehan, director of research at Mintel, which tracks direct mail and print advertising. But consumers should read the fine print before they move their money, she adds, because "big, really catchy perks are often tied to very big balances."

Also, in an environment when bank failures are surging — 19 banks have failed this year compared with three last year — perks alone won't bring in customers. That's why many institutions are also touting their financial strength.

Banks' "emphasis on safety certainly scratches where it itches for consumers in this current environment," McBride says.